TaxTMI 
TaxTMI 
TaxTMI 
2017 (5) TMI 678
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....ing material pertaining to the appellant was either found or seized in the premises searched. 2. Without prejudice to the legal ground above: a) The Ld. CIT(A) erred in confirming the disallowance of the claim of deduction of Rs. 6,84,62,992i'- u/s 80IB(10) of the Income Tax Act,1961 on the ground that the project approval as required u/s 80IB(10) of the Act is never obtained in the name of the appellant. In doing so the learned CIT(A) did not properly appreciate the contention of appellant that the appellant had developed an approved project and the approval has been obtained by Shri Harshad Doshi member of the appellant AOP as evidenced by the letter issued by Mira Bhayander Mahanagarpalika under Right to Information Act(RTI Act). The order of the learned CIT(A) on this point is contrary to the ratio of the Judgments of the following cases: i) Commissioner of Income Tax Vs Vandana Properties (76 DTR 363) (In The Bombay High Court). ii)CommissioD;er of Income Tax Vs Radhe Developers (341 ITR 403) (In The Gujarat High Court). b) On the facts and in the circumstances of the case, the learned CIT(A) erred in holding that the appellant has not commenced a legally approve....
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....mmencement Certificate No.MB/MNPINR/2600105-06 dated 27.01.2006. 3.On the facts and in the circumstances of the cases, the CIT(A) erred in confirming the contention of Assessing Officer to levying interest uls234B and 234C." 3. In the ground No 1 of appeal, the assessee has raised legal ground that assessment order was famed u/s 153A of the Income Tax Act, 1961 when there was no proper and valid search in as much as no specific panchanama was drawn in the name of the assessee and no incriminating documents were found and seized against the assessee during the alleged search from the premises search which belonged to persons other than the assessee 3.1 The ld. CIT(A) erred in holding that the assessee has not commenced a legally approved project in terms of Income Tax Act, 1961; 3.2 The ld. CIT(A) erred in confirming the action of the AO on the ground that the commencement certificate is not in the name of the assessee which was issued in the name of M/s Shanti Star Builders and others; 3.3 The ld.CIT(A) erred in confirming the finding of the AO that the project was not commenced by the assessee within the prescribed period as per the Income Tax Act, 1961. 4. The facts of the....
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....as even been conducted in the case of the appellant as well. The FAA on the basis of search warrant and panchanama for the said premises held that the search has been executed even in the case of the appellant. The ld. CIT(A) dismissed the appeal of the assessee by observing as under : "Decision: 9.0 I have carefully examined the facts of the case, the stand taken by the A.O in the assessment order and in the remand report, the grounds of appeal, the written submissions and further rejoinder filed by the appellant during the hearing proceedings. 9.1 The appellant's contention that there was no search action u/s.132 of the Act in the case of the appellant is not true. The perusal of the warrant of authorization issued shows the name of appellant along with the names of some other persons as a joint warrant of authorization. The following names are included in the warrant of authorization: (i) Shri Harshad Poonamchand Doshi (ii) M/s. Unique Shanti Developers (iii) M/s. Harsh Unique Developers (iv) M/s. Unique Star Developers (v) M/s. Harsh Deep Constructions (vi) M/s. Unique Star Constructions (vii) M/s. Harsh Developers 9.2 From the above, it can be seen th....
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....er of Income Tax Appeals to decide the appeals on merits. The substantial question of law on which the appeals have been admitted is decided in favour of the Revenue by holding that where the warrant of authorisation has been issued jointly the assessment can be made individually. In view of the retrospective effect having been given to Section 292CC of the Act, the law propounded in the cases of Smt. Vandana Verma and Smt. Madhu Chawla loses its significance." 9.4 In view of the above decision as well as the retrospective amendment made to section 292CC of the Act, the warrant of authorization issued jointly including the name of the appellant is valid and a separate assessment made in the case of the appellant on the basis of a joint warrant of authorization is also valid. 9.5 The appellant's arguments that there was no search action in the premises of the appellant and therefore there is no search which effectively took place in the case of the appellant is not the correct position of law. The warrant of authorization is always , issued to search a particular place in connection with the persons named in the warrant It is not necessary that the premises in possession o....
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.... ground that panchanama drawn in the name of Shri Harshad P Doshi which was the proof of search even in the case of assessee even when no incriminating material was either found or seized in the premises searched. The ld. AR vehemently submitted before us that the assessment order in question was void ab-initio and bad in law as the assessment has been framed under section 153A of the Act even though no search was actually conducted in the case of the appellant. The ld. Counsel submitted that the prescribed conditions as laid down for assumption of jurisdiction u/s 153A of the Act were not satisfied and the therefore the assessment framed under section 143(3) r.w.s. 153A of the Act was without valid jurisdiction and should be quashed. The ld. AR while referring to the provisions of section 153A of the Act and section 132(1) of the Act submitted before the Bench that there were specific circumstances as mentioned in clauses (a) to (c) of section 132(1) of the Act in which the prescribed authority is empowered to issue warrant authorizing the conduct of search. The ld. AR argued that as per the provisions of section 153A(1)(a), the AO is empowered to issue notice within the prescribe....
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....ed that search at the residence of member of assessee AOP would certainly not fulfill the prescribed conditions to authorize the search assessment under 153A of the Act in the case of assessee AOP and it was absolutely clear that no panchanama has been drawn which means that no search has taken place to provide legal basis for search assessment under section 153A of the Act. It would be contrary to the provisions of law to assume that once the warrant has been signed there is initiation of search for setting in motion the proceedings u/s 153A of the Act. The ld. AR further argued that the FAA was grossly wrong in holding that where the warrant issued in the name of the assessee and panchanama was drawn with the name of the assessee being mentioned and stated in the said panchanama there would be execution of search justifying the action u/s 153A of the Act. The ld. AR further contended that the FAA has failed to appreciate the issue from the legal perspective by overlooking and ignoring the fact that no search was conducted at the business premises of the assessee at Shradha Residency, Borivali (W). The ld. Counsel submitted that it would be inconceivable that that the business pre....
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....gard to the assessee it was not omission on the part of the search party to mention its name but a clear proof of the facts that no search had taken place. The ld. AR also submitted that provisions of section 153A of the Act inserted by the Finance Act in the year 2003 and in the explanatory note issued by the departmental circular No.7 of 2003 dated 5.9.2003 the scope of provisions in para 65.4 were explained which states that the AO shall issue notice to a person on whom a search was conducted to furnish return of income in respect of six assessment years immediately preceding the assessment year relevant to the previous year in which the search was conducted under section 132 of the Act or requisition was made under section 132A of the Act. Subsequently, the amendment was brought by Finance Act, 2008 and the circular No.1/2009 dated 27.3.2009 again reiterated that the provisions of section 153 of the Act came into operation where the search is conducted under section 132 of the Act or books of account or other documents or any assets are requisitioned under the provisions of section 132A. Thus the ld. AR submitted that the provisions of section 153A comes into operation only whe....
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....before us is as to whether the search can be said to have been taken place, conducted and concluded when no actual search was taken place in the premises of the assessee and no panchanama was executed. The panchanama is most important and vital documents in the search as period of limitation is reckoned from the last panchanama drawn and now issue is whether the assessments framed u/s 153A of the Act was valid or not. In view of the aforesaid defects and deficiencies in the search proceedings, the provisions of section 153A, 153B and 132(1) are relevant and needs to be understood in order to reach a correct conclusion. The provisions of section 153A, 153B and 132(1) are reproduced below : "153A. (1) Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, in the case of a person where a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A after the 31st day of May, 2003, the Assessing Officer shall- (a) issue notice to such person requiring him to furnish within such period, as may be specified in the notice, the return of income in respect of ....
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.... or under sub-section (1) of section 131 of this Act, or a notice under sub-section (4) of section 22 of the Indian Income-tax Act, 1922, or under sub-section (1) of section 142 of this Act was issued to produce, or cause to be produced, any books of account or other documents has omitted or failed to produce, or cause to be produced, such books of account or other documents as required by such summons or notice, or (b) any person to whom a summons or notice as aforesaid has been or might be issued will not, or would not, produce or cause to be produced, any books of account or other documents which will be useful for, or relevant to, any proceeding under the Indian Income-tax Act, 1922 (11 of 1922), or under this Act, or (c) any person is in possession of any money, bullion, jewellery or other valuable article or thing and such money, bullion, jewellery or other valuable article or thing represents either wholly or partly income or property which has not been, or would not be, disclosed for the purposes of the Indian Income-tax Act, 1922 (11 of 1922), or this Act (hereinafter in this section referred to as the undisclosed income or property), 9. It is clear from the perusal ....
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....re not satisfied. In the case of M/s Harsh Deep Construction (supra), it has been held as under : "Held 10. As noticed earlier, in the instant case, though the warrant of authorisation was prepared in the name of the assessee, yet there was no commencement or initiation of search in pursuance of the said warrant. When there is no commencement of search at all, the question of invoking the provisions of sec. 153A shall not arise. We notice that the Ld CIT(A) has expressed the view that the search need not take place at the business premises of the assessee itself, but it can be conducted in any other place also. There should not be any dispute with the observations so made by Ld CIT(A). But the important point is that the search in any other place should have taken place in pursuance of warrant of authorisation issued in the name of the assessee. In the instant case, the search at the residential premises of Shri Harshad Doshi has taken place in pursuance of warrant of authorisation issued in his name and not in the name of the assessee herein. Hence we find merit in the contentions of the assessee that the assessment order passed for AY 2008-09 u/s 153A of the Act is not valid....
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....assessee's name was not there in the panchnama, there was a proper execution of search justifying the action u/s 153A of the Act. In this case, we find that premises of the assessee are at Shraddha Residncy, Chandavarkar road, Borivali (W), Mumbai-400092. It is very surprising that according to the AO and FAA, the search was conducted on the assessee but the business premises of the assessee were spared from proceedings u/s 132(1) of the Act and even no incriminating material was found and seized from the premises of members of AOP assessee. We, therefore, are of the view that in view of the fact that there was no search conducted in the premises of the assessee and no punchnama was drawn up, the assessment proceedings u/s 153A of the Act were without valid jurisdiction. The case of the assessee also find support from the decision in the case of J M Trading Corporation(supra) in which , the co-ordinate Bench of the Tribunal has held as under : "Held :Section 132 provides the acts and deeds to be carried out by the search team at the premises of the assessee. The conduct of search includes acts, deeds and things enumerated under section 132 which an authorized officer is bound to ....
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...., The Tribunal held as under : "The warrant of authorization being issued in the name of the trust and the assessee, being the Managing Trustee of the Trust, but no search operation was conducted in premises of assessee and in the warrant of authorization The address of the place to be searched is not the address of the assessee-individual, no panchanama is also drawn in pursuance of the warrant of authorization in the case of the assessee, no documents were seized or impounded as such from the assessee, no documents were sized or impounded as such during he course of search from the assessee, he AO was not justified in initiating proceedings or assuming valid jurisdiction under section 153A against the assessee" In the case of Sarvamangalam Builders and Developers Pvt ltd (supra), it has b been held by the Delhi Tribunal as under : "Held : 13. In view of the above discussion, we hold that since no search was conducted on the premises of the assessee and the search conduced was conducted on a premises not owned by the assessee, the proceedings u/s 153A of the Act are invalid and bad in law, Accordingly, the orders of the authorities below are set aside quashed" 10. From ....
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.... discussion hereinabove and accordingly, we are of the considered view that the order of the ld.CIT(A) deserved to be set aside and accordingly, we hold that the proceedings under section 153A of the Act is without any valid jurisdiction so is the consequent assessment order also passed u/s 143(3) r.w.s.153(A) of the Act and hence quashed. The ground of appeal is allowed. 11. In the second ground which is without prejudice to ground no 1, the assessee has challenged the confirmation of disallowance of claim of deduction of Rs. 6,84,62,992/- under section 80IB(10) of the Income Tax Act on the ground that necessary approvals as required by the assessee u/s 80IB(10) of the Act were never obtained from the designated authorities by the assessee. 12. The brief facts and chronology of events are as under: a. In terms of agreement for development dated 11.10.1998 between M/s Shanti Builders and Shri Harshad Rai Poonamchand Doshi, development rights were transferred on certain plots in favour of late Mr. Doshi for a consideration of Rs. 30 Lacs. The plots under consideration bearing different survey numbers admeasured 2,19,287 sq. yards. b. In terms of development agreement dated 12/....
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.... not envisage commencement of project by one entity and completion by another entity for purposes of eligibility. c. Shree Harshad P. Doshi member of AOP acquired the right of development through the power of attorney and he was not exclusive owner of land on which the project was developed. The claim of approval on the basis of certificate from local authority cannot be accepted. d. In response to inquiry letter issued, M/s Shanti Star Developers had accepted that certain development right were transferred in sector no.1 vide agreement dated 12.09.2000 to Mr. Harshad Doshi however as per the AO there was however no transfer of ownership of land. e. The completion certificate dated 01.10.2007 did not mention the name of the assessee or its AOP members. f. As per the AO M/s Shanti Star Developers was eligible for claiming deduction U/S 80IB(10) of the Act but they had not preferred such claim. g. In the Commencement Certificate dated 27.01.2006 it was mentioned in para 4 that the plot of land cannot be sub divided without the prior approval of Municipal Corporation. The documents on record did not evidence any approval granted by Municipal Corporation to the appellant. h....
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....f Mr. Harshad Doshi and his wife Madhuben Doshi by the landlords of the plot of land of which M/s Shanti Star Builder were the developers. Mr. Harshad Doshi had acquired development rights from M/s Shanti Star Builders. In April 2006, a Joint Venture was created comprising of Mr. Harshad Doshi, Mr. Chandrakant Doshi & Mr. Hemal Doshi to execute the project as Mr. Harshad Doshi who had acquired the development rights was handicapped and was not in a position to move about and attend the affairs of construction and co-ordination with various departments by himself. The assessee along with M/s Shanti Star Builders has applied for sanction of construction plan as per the details furnished before the Commissioner, Bhayander Municipal Corporation and the commencement certificate was granted accepting assessee's request. The appellant had constructed a housing project on the plot of land where the approvals were received and have completed the project as per the specifications and have received Occupancy Certificate for the said project. The same was also certified by the Architect namely M/s Avinash Mhatre and Associates. The conditions as specified in the provisions of section 80(IB....
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....ear in which the housing project is approved; e). the project should be on a plot of land having minimum area of 1 acre; f). the residential unit in the project has a maximum built area of 1000 square feet where the residential unit is situated in Delhi or Mumbai or within twenty-five kilometres from the municipal limits of these cities and one thousand and five hundred square feet at any other place; g). the built up area of the shops and other commercial establishment included in the housing project does not exceed the prescribed percentage or the prescribed limit of the built up area." The project under consideration was approved on 27.1.2006 and the project was completed as per the occupancy certificate issued on 1.10.2007. The total area constructed and completed of building was 12439.70 Square mtr. which is equivalent to 133901 sq.ft which is more than 1 acre and the built up area of each completed flat in the said project was not more than 1000 sq. ft. The above facts have been confirmed by M/s Avinash Mhatre & Associates , architect by issuing the certificate to this effect. In our opinion the having considered the facts of the case of the assessee in the light of....